Fab buys 'luxury Ikea' retailer

E-commerce site Fab has acquired One Nordic Furniture Co., the "luxury Ikea"

Struggling e-commerce site Fab has gone shopping. The once high-flying company, which has recently suffered a series of pitfalls including a round of layoffs last month, announced Wednesday that it is buying One Nordic Furniture Co., a retailer known as the "luxury Ikea" with operations in Finland and Sweden. The deal is the next step in chief executive Jason Goldberg's strategy to design, market and sell private label goods rather than rely on the products of other brands.

"Design is at the center of Fab—and has been since Day 1," said Mr. Goldberg in a statement. "Teaming up with One Nordic adds incredible talent to our design bench and brings us ever-closer to our suppliers and manufacturers."

Founded in 2011, One Nordic sells high-end furniture and accessories created by Nordic designers in 30 different countries. Chief executive Joel Roos said the Fab partnership will offer "a new platform through which to share our work with people around the world."

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Financial details of the transaction, slated to be finalized at 2 p.m. Wednesday, were not disclosed, though the deal included a combination of cash and stock valued in the tens of millions of dollars, according to a Fab spokeswoman. One Nordic will own 5% of the combined company.

Fab, which transitioned from a networking site for gay men to an online retailer of cool design products three years ago and was named a Crain's Fast 50 in 2013, has seen substantial growth: revenues in 2012 were estimated to be $115 million and the firm has attracted over $330 million in funding. But the company has had trouble finding a long-term business model. It transitioned last year from a flash-sale model to a traditional retail system and began focusing on its own products. In May, Fab reportedly laid off some 90 staffers—following two rounds of layoffs in the previous 12 months. The company's current headcount is around 200, down from 700 a year ago. Mr. Goldberg had been surprisingly forthcoming about Fab's struggles by chronicling them on his personal blog Betashop, but he shut it down earlier this spring.